What is Forex? In general, Forex trading, FX trading, Spot trading or Foreign Exchange trading, is the simultaneous exchange of one country’s currency for that of another. In term of size, the Forex market is the world’s largest and most liquid financial market, whose daily average trading volume exceeds $5 trillion. Unlike other financial markets that operate at a centralized location, the worldwide Forex market has no central marketplace.

The Forex market is just a global electronic network of banks, financial institutions, brokers and individual Forex traders, all involved in the buying and selling of currencies. Trading activity occurs worldwide 24 hours a day, corresponding to the opening and closing of financial centers around the world; and so at any time, five days a week and in any location around the globe there are Forex buyers and sellers, making the Forex market the most active and liquid market in the world. Traditionally, Forex was traded in large volumes by only the banking sectors for their own commercial and investment purposes. But since 1971, when the exchange rates were allowed to be floated freely, trading volume has increased dramatically. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the Forex market to speculate, pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets. However, it is important to note it is estimated that over 90% of the Forex daily trading volume is generated as a result of speculative trades.